Value added tax and other indirect taxes
Scope and registration
VAT is charged on taxable supplies (standard 20%, reduced 5%, zero 0%) made by a taxable person in the course or furtherance of business. Registration is compulsory once taxable turnover exceeds £90,000 in any rolling 12 months (backward look) or is expected to exceed it in the next 30 days (forward look). Notify within 30 days of the end of the month in which the threshold was breached; VAT is then due from the first day of the second month. Deregistration is available below £88,000.
Mechanics
The tax point determines the return period: the basic tax point is the date of supply, overridden by invoice or payment. Output tax less input tax is payable, and input tax is recoverable on business purchases supported by a valid VAT invoice. Exempt supplies (finance, insurance, education, land) give no input tax recovery and create partial exemption, subject to a de minimis test (broadly £625 per month on average and 50% of total input tax).
Special situations
Option to tax on land, transfer of a going concern outside the scope, reverse charge on imported services and construction services, margin schemes, and place of supply rules for goods and services.
Traps
Confusing zero-rated with exempt; treating the rolling 12-month test as a calendar-year test; and forgetting that errors above the disclosure threshold must be separately notified.
Other indirect taxes
SDLT on land (including surcharges for additional dwellings and non-residents), customs and excise duties. Late submission and payment now attract a points-based penalty regime rather than the old default surcharge.